(Reuters) – Credit card company Synchrony Financial beat second-quarter earnings estimates on Tuesday as rapid rate hikes by the U.S. Federal Reserve.

Lenders have benefited from the Fed’s aggressive monetary tightening, but have also had to allocate greater provisions for potential defaults as higher borrowing costs hit consumers’ financial health.

Synchrony reported earnings of $1.32 per share in the reported quarter, compared with analysts’ median estimate of $1.24, according to Refinitiv IBES data.

Net interest income (NII) increased 8.4% to $4.1 billion, helping to soften the impact of higher provisions for credit losses to $1.38 billion, up from $724 million a year earlier.

Last week, the largest US banks also reported gains on higher interest rates, but also warned of the risks ahead as US consumers cut spending and losses piled up in credit cards and office real estate.

Synchrony Financial’s total deposits increased 1.8% to $75.77 billion from the first quarter and increased 17% over the prior year.

Investors have been scrutinizing deposit trends at banks and other financial companies after an uncontrolled run on deposits led to the collapse of three lenders earlier this year.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shinjini Ganguli)

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